Electronic FBAR filing has become mandatory, including for late filings and corrected FBARs, effective July 1, 2013.
Under the new rules, a penalty may be imposed for filing your FBAR on paper and not complying with the e-filing requirement.
Paradoxically, even though FBAR e-filing has become mandatory, individual and professional tax preparation software do not yet have the capability to create and file an FBAR electronically.
At Gedeon Law & CPA, however, we are currently in the process of becoming an authorized CPA third-party FBAR e-filer so we can assist clients in the preparation and filing of their FBARs under the new filing rules.
While the new e-filing requirement may make it easier to file an FBAR going forward, there remains an open question on how FBAR penalties will be assessed for late filed FBARs. The penalty applicable to a late filed FBAR is up to $10,000 per account that should be disclosed on the FBAR. When, however, there is “reasonable cause” for filing late, the penalty can be waived. Unfortunately, the new e-filing system does not currently support the ability to provide a reasonable cause statement that explains why the FBAR is being filed late. Therefore, there is a real risk that penalties will be automatically levied on a taxpayer who electronically files a late FBAR.
For those looking to file an FBAR late under the new e-filing system, we are available to provide a confidential consultation to assist with this complex issue.